Question
On 1 July 2023, Apple Limited acquired all the issued shares of Pear Limited for $270,000, when the equity of Pear Limited consisted of: Share
On 1 July 2023, Apple Limited acquired all the issued shares of Pear Limited for $270,000, when the equity of Pear Limited consisted of:
Share Capital $60,000
Retained Earnings $150,000
All of the identifiable net assets were recorded at their fair value in the books of Pear Limited, except for inventory which had, at acquisition date, a carrying amount of 49,000 and a fair value of 57,000.
The tax rate is 30%.
The pre-acquisition entry at 1 July 2023 for Apple Limited is:
Select one:
a.
Dr Retained Earnings $ 150,000
Dr Share Capital$ 60,000
Dr BCVR$ 60,000
Cr Investment in Pear$ 270,000
b.
Dr Retained Earnings $ 150,000
Dr Share Capital$ 60,000
Dr BCVR$ 5,600
Dr Goodwill$ 54,400
Cr Investment in Pear$ 270,000
c.
Dr Retained Earnings $ 60,000
Dr Share Capital$ 150,000
Dr BCVR$ 60,000
Cr Investment in Pear$ 270,000
d.
Dr Retained Earnings $ 150,000
Dr Share Capital$ 60,000
Dr Inventory$ 5,600
Dr Goodwill$ 54,400
Cr Investment in Pear$ 270,000
e.
Dr Retained Earnings $ 150,000
Dr Share Capital$ 60,000
Dr Inventory$ 8,000
Dr Goodwill$ 52,000
Cr Investment in Pear$ 270,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Elementary Statistics
Authors: Mario F. Triola
12th Edition
0321836960, 978-0321836960
